EXHIBIT 10.21
PHOTOMASK SUPPLY
AND STRATEGIC ALLIANCE AGREEMENT
BY AND AMONG
ALIGN-RITE INTERNATIONAL, INC.,
ALIGN-RITE, INC.
AND
XXXXXX CORPORATION
DATED JULY 2, 1999
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions..............................................1
ARTICLE 2 Supply of Products.......................................3
ARTICLE 3 Product Quality, Delivery, Service and Pricing...........4
ARTICLE 4 New and Derivative Products..............................7
ARTICLE 5 Product Orders...........................................8
ARTICLE 6 Manufacture..............................................9
ARTICLE 7 Delivery and Payment....................................10
ARTICLE 8 Strategic Alliance, Consultation and Cooperation
Arrangements ...........................................10
ARTICLE 9 Termination Rights And Obligations Upon Termination.....11
ARTICLE 10 Warranties..............................................12
ARTICLE 11 Dispute Resolution and Arbitration......................13
ARTICLE 12 Confidentiality.........................................15
ARTICLE 13 General.................................................15
13.1 Independent Contractors...........................15
13.2 Amendments; Waivers...............................15
13.3 Schedules; Exhibits; Integration..................15
13.4 Force Majeure.....................................16
13.5 Assignment........................................16
ARTICLE 14 Notices.................................................16
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PHOTOMASK SUPPLY AND STRATEGIC ALLIANCE AGREEMENT
This Supply Agreement is entered into as of July 2, 1999, (the
"Effective Date") by and among Align-Rite International, Inc., a California
corporation ("Align-Rite"), and Align-Rite, Inc., a Florida corporation ("Sub"),
on the one hand, and Xxxxxx Corporation, a Delaware corporation ("Xxxxxx"), on
the other acting through its Semiconductor Business.
RECITALS
WHEREAS, Sub has purchased the Photomask business unit of Xxxxxx
(the "Photomask Business Unit") on the date hereof pursuant to the terms of that
certain Asset Purchase Agreement, dated as of even date, by and among Align-Rite
and Sub, on the one hand, and Xxxxxx on the other (the "Asset Purchase
Agreement").
WHEREAS, the parties hereto have agreed that Align-Rite will
manufacture and supply to Xxxxxx, and Xxxxxx will purchase exclusively from
Align-Rite, 100% of Xxxxxx' Photomask requirements in accordance with the terms
of this Agreement for a period of 10 years from the Effective Date (the "Term").
WHEREAS, Xxxxxx shall use its commercially reasonable efforts to
promote Align-Rite's Photomask products and services to (i) the merchant
customers of the Photomask Business Unit, (ii) Xxxxxx' joint venture partners,
(iii) the semiconductor foundry businesses utilized by Xxxxxx which will or are
envisioned to require the purchase of Photomask (as defined below) products and
services, and (iv) other companies and foundries within the influence or under
the control of Xxxxxx, in each case in accordance with the terms of this
Agreement.
WHEREAS, Align-Rite shall strive to be the industry leader in
quality, delivery, service and price, and provide the benefit of such world
class operation to Xxxxxx.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and covenants set forth below, the parties mutually agree as
follows:
AGREEMENT
ARTICLE 1
Definitions
In this Agreement, unless the context otherwise requires, the
following expressions shall have the following meanings:
"Affiliates" shall mean (a) any company owned or controlled to the
extent of at least fifty percent (50%) of its issued and voting capital by a
party to this Agreement and any other company so owned or controlled (directly
or indirectly) by any such company or the owner of any such company, or (b) any
partnership, joint venture or other entity directly or indirectly controlled by,
controlling, or under common control of, to the extent of fifty percent (50%) or
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more of voting power (or otherwise having power to control its general
activities), a party to this Agreement, but in each case only for so long as
such ownership or control shall continue;
"Align-Rite" means Align-Rite International Inc., a California
corporation, and each of its subsidiaries from time to time;
"Business Assets" means those assets previously owned and used by
Xxxxxx to manufacture Photomasks which were purchased by Align-Rite pursuant to
the Asset Purchase Agreement, including equipment, materials, know-how, work in
progress, related inventory and goodwill used by and associated with the
Photomask business unit of Xxxxxx;
"Cosmetic Defects" means particles, scratches, stains and/or
imperfections in or on the photomask quartz or glass substrate which are outside
the active patterned area on the photomask quartz or glass substrate which the
customer uses to transfer the circuit patterns onto the silicon wafer;
"Derivative Products" means any Photomask product built on a
substrate, then currently being produced by Align-Rite for other customers,
which is required by Xxxxxx from time to time, which is not currently on the
Product and Services Pricing Schedule, or which is either a tightening of
specifications or a relaxing of specifications of an existing Product.
"Facility Lease" means the lease of the Premises entered into among
Sub and Hams on the date hereof;
"Force Majeure" means, in relation to any party, circumstances
beyond the reasonable control of that party including, without limitation, acts
of God, acts of any governmental or super-national authority, war or national
emergency, riots, civil commotion, fire, explosion, flood, epidemic, lock-outs
(whether or not by that party), strikes and other industrial disputes (in each
case, whether or not relating to that party's work force);
"Mask Order" means a written order from an authorized originator
employed by Xxxxxx specifying the Product(s) required, applicable
Specification(s), amount of Product(s), date(s) required and delivery
instructions (i.e. standard or expedited);
"New Products" means any Photomask product, other than a Product or
Derivative Product, built on a substrate, required by Xxxxxx from time to time,
which is not currently being produced by Align-Rite for other customers, is not
currently on the Product and Services Pricing Schedule, and which is neither a
tightening of specifications nor a relaxing of specifications of an existing
Product.;
"Photomask Business Unit" has the meaning set forth in the recitals.
"Photomasks" means precision photographic quartz or glass plates
containing microscopic images of integrated circuits for use as master images to
transfer circuit patterns
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onto semiconductor wafers during the fabrication of integrated circuits and
other semiconductor products;
"Premises" means the real property located within the complex of
buildings known as the Semiconductor Sector located at 0000 Xxxx Xxx Xxxx, X.X.,
Xxxx Xxx, Xxxxxxx 00000 and known as Building 60 and a portion of Building 56
used in the Photomask Business Unit, which are the subject of the Facility Lease
entered into among Sub and Xxxxxx on the date hereof;
"Product Period" means a continuous twelve month period, the first
such period ending on June 30, 2000.
"Products" means the Photomask products and services listed on the
Product and Services Pricing Schedule, as amended from time to time, or any
other Photomask Product or services purchased from Align-Rite by Xxxxxx;
"Product and Services Pricing Schedule" means a schedule listing the
Product and related services, together with the relevant Specification thereof
and applicable price based on anticipated demand for the Products, which
schedule shall be modified in accordance with Article 3 hereof (the first such
schedule being in the form set out in Schedule 1);
"Quarter" means a continuous calendar period of three months, the
first such period ending on September 30, 1999;
"Specification" means, in respect of any Product, the specification
agreed in writing between Xxxxxx and Align-Rite from time to time. A schedule
for the initial Specifications for Products, effective as of July 2, 1999, is
noted in and/or attached to Schedule 1;
"Standard Delivery" has the meaning specified in Section 5.5; and
"Term" shall mean the ten-year term of this Agreement
ARTICLE 2
Supply of Products
2.1 The parties hereby agree that, during the Term of the Agreement,
Xxxxxx shall satisfy 100% of its and its Affiliates' requirements for
Photomasks, or any other product with similar functional characteristics, solely
through its purchase of Products, Derivative Products and New Products from
Align-Rite; provided, however, that (i) Align-Rite manufactures and supplies
such Products, Derivative Products and New Products in accordance with the
competitive standards for quality, delivery, price and service as set forth in
Article 3, and (ii) such Products, Derivative Products and New Products are
within the capabilities of the Photomask technologies then utilized by
Align-Rite.
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2.2 Xxxxxx hereby confirms its intent to order and purchase during the
first three Product Periods, solely on its behalf or on behalf of its Affiliates
approximately Fifteen Million Dollars ($15,000,000) in aggregate of Products,
Derivative Products and New Products from Align-Rite at the Product prices set
forth on the Product and Services Pricing Schedule, as such Product and Services
Pricing Schedule is amended pursuant hereto.
2.3 Xxxxxx may purchase Photomasks from semiconductor foundry companies or
the Photomasks suppliers designated by such foundries, pursuant to its
agreements to facilitate the manufacturing of certain Xxxxxx integrated circuit
products at such foundries, but such Photomask purchases shall not decrease the
purchase requirements of Xxxxxx from Align-Rite hereunder or Xxxxxx' obligations
pursuant to Article 8.
ARTICLE 3
Product Quality, Delivery, Service and Pricing
3.1 Align-Rite shall be deemed to have satisfied the standards for quality
referred to in Section 2.1(i) herein by maintaining a 1% or less product return
rate during the first Product Period for non-compliance with Specifications,
excluding Cosmetic Defects which will be handled as a separate issue, as set
forth in applicable Mask Orders.
3.2 Align-Rite shall be deemed to have satisfied the standards for
delivery referred to in Section 2.1(i) herein by maintaining no less than a 90%
performance to schedule rating during the first Product Period with respect to
the products delivered pursuant to Section 5.5 herein.
3.3 Pricing.
3.3.1 Align-Rite shall be deemed to have satisfied the standards for
price referred to in Section 2.1(i) herein by satisfying the
provisions set forth in this Section 3.3.1. The parties agree that
for the first Product Period the price per unit for each Product
shall be, so long as Xxxxxx and Align-Rite are in compliance with
Article 2 hereof, as set forth in the Product and Services Pricing
Schedule. Within 30 days prior to the end of each Product Period,
Align-Rite and Xxxxxx shall agree to adjust the Product and Services
Pricing Schedule in effect at such time to provide that such new
product prices for the ensuing Product Period shall be 100% or less
of the then current lowest Photomask prices provided by Align-Rite
to its best top twelve customers (excluding ASM Lithography The
Netherlands and Temic/Atmel-Europe) with comparable product
specifications, annual mask purchases, unit volume levels and
cycletime requirements (provided, however, that with respect to the
E-Beam, 725_1XPA Quartz 7.25 x .150 Photomask Product, the purchase
price for such product during the second Product Period shall not
increase by more than 10% from the purchase price for such product
as set forth in the Product and Services Pricing Schedule and at no
time during the Term of this Agreement shall the purchase price for
such product be greater than the prices provided to Align-Rite's
best top twelve customers (excluding ASM Lithography The Netherlands
and Temic/Atmel-Europe) with comparable product
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specifications, annual mask purchases, unit volume levels and
cycletime requirements) so long as (i) Xxxxxx and Align-Rite are in
compliance with Article 2 hereof, and (ii) the aggregate product
volume required by Xxxxxx meets a minimum targeted amount to be
mutually agreed upon by the parties during the fourth through the
tenth Product Periods. For the sole purpose of providing Hams with
an opportunity to confirm Align-Rite's compliance with this Section
3.3.1 during the last two months of each Product Period, Align-Rite
shall, at a frequency of no more than once per Product Period
(commencing after the ten month of the first Product Period) and
upon thirty days written notice from Xxxxxx and at Xxxxxx' cost,
provide Xxxxxx' nominated accounting firm, which shall be an
accounting firm of national reputation, or reputable semiconductor
industry consultant, with access to and copies of all invoices,
records and other documents which relate to the Products and
Services Pricing for comparable products and services provided by
Align-Rite to its best top twelve customers (excluding ASM
Lithography The Netherlands and Temic/Atmel-Europe). Xxxxxx'
nominated accounting firm or reputable semiconductor industry
consultant shall be bound by Article 12 hereof as if such nominated
accounting firm or reputable semiconductor industry consultant is a
party hereto.
3.3.2 Beginning with the commencement of the second Product Period
and for each subsequent Product Period thereafter during the Term of
this Agreement, Align-Rite shall provide Xxxxxx with the following
volume discounts on Xxxxxx' purchases of Products, Derivative
Products and New Products aggregating in excess of $5 million in a
single Product Period:
---------------------------------------
Amounts in Excess of Amount of
$5 million Discount
---------------------------------------
$1 - $ 999,999 5.0%
---------------------------------------
$1,000,000 - $1,999,999 7.5%
---------------------------------------
Amounts in excess of 10.0%
$2,000,000
---------------------------------------
Any such discounts shall be calculated by Align-Rite and confirmed
by Xxxxxx at the end of each applicable Product Period and shall be
paid by Align-Rite to Xxxxxx within thirty (30) days of the end of
such Product Period.
3.3.3 During the first eighteen months of the Term, Align-Rite shall
provide Xxxxxx with a 20% discount to the then current foundry
Photomask prices with respect to Photomasks manufactured by
Align-Rite for use at Xxxxxx' semiconductor foundry companies or the
Photomask suppliers designated by such foundries. For purposes of
this Section 3.3.3, current foundry Photomask prices shall be
determined by Align-Rite's nominated accounting firm, which shall be
of national reputation or reputable semiconductor consultant,
through a review of Xxxxxx' purchase orders, records and other
documents which relate to such
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foundry Photomask products for comparable product specifications,
annual mask purchases, unit volume levels and cycletime
requirements. Following such eighteen-month period, the products
supplied by Align-Rite under this Section 3.3.3 shall be added to
the Product and Services Pricing Schedule and shall be treated as a
"Product" for purposes of this Agreement.
3.3.4 The price of the Products as set out in the Product and
Services Pricing Schedule is, and shall be, exclusive, of(i) any
costs of transport and insurance of the Products; and (ii) any value
added tax or other applicable sales tax or duty which may be
chargeable in respect of the manufacture and supply of the Products.
3.4 Align-Rite shall be deemed to have satisfied the standards for service
referred to in Section 2.1(i) herein during the first Product Period by
satisfying the provisions set forth in this Section 3.4. The parties agree that
at the commencement of the second Product Period, the parties will agree to a
set of written, reasonable, competitive, mutually agreeable, measurable and
quantifiable service goals.
3.5 Within thirty (30) days of the end of each Product Period during the
Term of this Agreement, an executive representative of each of Align-Rite and
Xxxxxx shall agree to a set of written, reasonable, competitive, mutually
agreeable, measurable and quantifiable goals with respect to product quality,
delivery and service for the ensuing Product Period. A status report on
Align-Rite's performance to goals shall be provided to Xxxxxx on a quarterly
basis. Align-Rite shall be deemed to have satisfied the standards for product
quality, delivery and service hereunder for such applicable Product Period by
materially satisfying such goals.
3.6 If, during the Term of the Agreement, Align-Rite does not satisfy the
provisions of Sections 3.1, 3.2, 3.3 and/or 3.4, Xxxxxx shall be entitled to
give written notice to Align-Rite within thirty (30) days of the relevant
event(s) specifying the details of such noncompliance and Align-Rite shall have
fifteen (15) calendar days following receipt of such notice to present Xxxxxx
with a plan and/or set of procedures to remedy such noncompliance. Such planned
remedies and/or procedures shall meet with Xxxxxx' satisfaction and Xxxxxx'
satisfaction shall not be unreasonably withheld. Such planned remedies and/or
procedures shall be completed within a subsequent forty five (45) calendar day
period. During the period of sixty (60) days or less following receipt by
Align-Rite of such noncompliance notice from Xxxxxx describing the points of
noncompliance, Xxxxxx shall have the right on an as necessary basis to procure
only such applicable Photomask products and services from third parties as it
deems necessary to support its semiconductor manufacturing activities which are
limited to the Products and or services covered in the notice of noncompliance.
Xxxxxx agrees to resume satisfying 100% of its and its Affiliates requirements
for Photomasks pursuant to Section 2.1 immediately upon Align-Rite's completing
its plan and/or set of procedures to Xxxxxx' reasonable satisfaction and such
reasonable satisfaction shall not be unreasonably withheld to remedy such
noncompliance. In the event that Align-Rite fails to remedy any and all such
noncompliance(s) during the sixty (60) day period from the date of notice of
such noncompliance by Xxxxxx then Xxxxxx shall have the right
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to procure from third parties only such applicable non-compliant Photomask
products or services as the case may be on a continuous basis for the remainder
of the Term of this Agreement or until such time as Align-Rite may provide a
written request that Xxxxxx requalify Align-Rite for the supply of the
applicable product(s) or service(s) with such requalification not to be
unreasonably delayed. Following such requalification, Xxxxxx shall again be
bound by Section 2.1.
ARTICLE 4
New and Derivative Products
4.1 In the event Xxxxxx anticipates a requirement for a Derivative
Product, it shall (i) notify Align-Rite as soon as practicable, (ii) provide
Align-Rite with the Specification for such Derivative Product together with an
estimate of its anticipated annual demand for such Derivative Product, and (iii)
request Align-Rite to provide a quotation for the manufacture and supply of such
Derivative Product.
4.2 Align-Rite shall provide a quotation for the Derivative Product at an
amount equal to 100% or less of the then current lowest Photomask prices
provided by Align-Rite to its best top twelve customers (excluding ASM
Lithography The Netherlands and Temic/Atmel-Europe) for comparable volume levels
and product specifications, and subject to verification as provided in Section
3.3, Hams shall place its orders for such Derivative Product.
4.3 Upon acceptance of the quotation by Xxxxxx and the placing of the
first order for any Derivative Product, such Derivative Product and the unit
price shall be added to the Product and Services Pricing Schedule and the
Derivative Product shall be treated as a "Product" for the purposes of this
Agreement.
4.4 In the event Xxxxxx anticipates a requirement for a New Product, it
shall (i) notify Align-Rite as soon as practicable, (ii) provide Align-Rite with
the specification for the New Product together with an estimate of its
anticipated annual demand for such New Product, and (iii) request Align-Rite
provide a quotation for the manufacture and supply of such New Product.
4.5 Upon acceptance of the quotation by Xxxxxx and the placing of the
first order for any New Product, such New Product and the unit price shall be
added to the Product and Services Pricing Schedule and the New Product shall be
treated as a "Product" for the purposes of this Agreement.
4.6 In the event Xxxxxx does not accept the quotation given by Align-Rite,
it shall be entitled to obtain bona fide quotes from at least two nationally
recognized, third party manufacturers of Photomasks for the manufacture and
supply of the New Product and the provisions of Section 4.7 shall apply.
4.7 In the event that the average of the quotations received by Xxxxxx
pursuant to Section 4.6 results in a price for a New Product which is less than
the price quoted for such New
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Product by Align-Rite. If Align-Rite reduces its quotation to the lower of the
quotations received by Xxxxxx for said New Product, then the provisions of
Section 4.5 shall apply.
4.8 Xxxxxx shall provide Align-Rite's accounting firm with access to, and
copies of, all quotations obtained pursuant to Section 4.6 (and relevant
supporting documents) for verification in the same manner as Xxxxxx verification
under Section 3.3.
ARTICLE 5
Product Orders
5.1 Xxxxxx shall, no later than five (5) days before the beginning of each
month, give Align-Rite written notice of its anticipated requirements for
Products for the forthcoming month.
5.2 In order to facilitate the purchase of Products, all applicable
Business Units of Xxxxxx which require Photomask Products shall issue to
Align-Rite upon the execution of this Agreement, a blanket purchase order
regarding its anticipated Photomask requirements for the first Product Period.
At the end of the first Product Period new blanket purchase orders will be
issued for each succeeding Product Period.
5.3 All applicable Photomask Business Units of Xxxxxx which require
Photomask Products shall issue Mask Orders for Products in writing.
5.4 Align-Rite shall provide Xxxxxx with expedited Product services at an
additional charge, which shall be in addition to the Product prices set forth in
the Product and Services Pricing Schedule, and shall be payable by Xxxxxx in
accordance with Section 7.3. Such additional charge shall be calculated as
follows: (i) for 24-hour Product delivery cycletime, Xxxxxx shall pay Align-Rite
an additional amount equal to 65% of the Product prices set forth in the Product
and Services Pricing Schedule, as such Product and Services Pricing Schedule is
amended pursuant to Section 3.1, and (ii) for 48-hour Product delivery
cycletime, Xxxxxx shall pay Align-Rite an additional amount equal to 32.5% of
the Product prices set forth in the Product and Services Pricing Schedule, as
such Product and Services Pricing Schedule is amended pursuant to Section 3.1;
provided, however, that during the first Product Period of the Agreement,
Align-Rite shall provide Xxxxxx with such expedited product services at no
additional charge to Xxxxxx for up to an aggregate amount not to exceed $28,354
per month, which monthly amount shall be calculated using the formulae set forth
in items (i) and (ii) above.
5.5 Unless Xxxxxx requests expedited Product delivery service pursuant to
Section 5.4, Align-Rite shall provide its standard delivery ("Standard
Delivery") service pursuant to which it shall ship the first 2 Photomask levels
within three working days from receipt of the Mask Order and relevant data,
excluding the period from the time Align-Rite sends the completed array of
patterns to appear on the applicable Photomask product to the appropriate Xxxxxx
engineer until approval from said appropriate Xxxxxx engineer is received by
Align-Rite, and ship the remaining sequential Photomask levels at a rate of one
Photomask level per successive working day thereafter.
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5.6 During the Term, Align-Rite shall use the Business Assets to provide
Xxxxxx' purchase orders and/or Mask Orders first priority among the other mask
orders received by Align-Rite from third parties so long as Xxxxxx is in
compliance with Article 2 hereof. In the event Align-Rite is unable to satisfy
Xxxxxx' purchase orders and/or Mask Orders using the Business Assets, Align-Rite
shall use commercially reasonable efforts to utilize such other Photomask
manufacturing facilities as are then owned by Align-Rite to satisfy the purchase
orders and/or Mask Orders in accordance with Standard Delivery or expedited
delivery, if applicable, or as otherwise may be agreed between the parties in
writing from time to time. If the purchase orders and/or Mask Orders for
Products exceed the output capacity of the Business Assets and the other
Photomask manufacturing facilities as are then owned by Align-Rite, Align-Rite
shall, as soon as practicable, notify Xxxxxx, and Align-Rite shall have the
right to contract with such third party Photomask manufacturers for a period of
time as agreed between the parties, until Align-Rite establishes the requisite
capacity.
5.7 During the Term, Align-Rite shall, as it deems appropriate, make the
capital expenditures at its own expense necessary to accommodate the manufacture
of all Photomask products required by Xxxxxx or its subsidiaries.
5.8 Cancellations and Schedule Changes.
5.8.1 Xxxxxx may cancel without charge any purchase order and/or
Mask Order or portion thereof for a Product at any time prior to the
date on which Align-Rite has started manufacturing such Product.
5.8.2 In the event Xxxxxx cancels a purchase order and/or Mask Order
for a Product after Align-Rite has purchased custom raw materials
for such Product, but before Align-Rite has started manufacturing
such Product, Xxxxxx shall reimburse Align-Rite for the cost of such
custom raw materials.
5.8.3 In the event Xxxxxx cancels a purchase order and/or Mask Order
for a Product after Align-Rite has started manufacturing the
Product, Xxxxxx shall pay one hundred percent (100%) of the price of
such Product. Payment of amounts due under this Section shall be
made within thirty (30) days of the date of each invoice.
ARTICLE 6
Manufacture
6.1 Each Product sold by Align-Rite to Xxxxxx pursuant to this Agreement
shall conform in all respects to its Specification as set forth on the
applicable purchase order and/or Mask Order.
6.2 Align-Rite and Xxxxxx shall consult with one another annually (or more
frequently if appropriate or desirable) during the Term in order to ensure that
the Specifications of the Products are mutually acceptable to both parties.
Align-Rite shall agree to any reasonable change
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to a Specification requested by Xxxxxx provided that such change is capable of
being made by Align-Rite and that the price of the Product in question is
increased or decreased to cover any increased or decreased cost of manufacture.
ARTICLE 7
Delivery and Payment
7.1 Align-Rite shall use commercially reasonable efforts to fulfill Mask
Orders received from Xxxxxx for the Products on the date specified in the
purchase order and/or Mask Order and shall give Xxxxxx as much advance notice as
reasonably possible if despite its commercially reasonable efforts it is unable
for any reason to fulfill any purchase order and/or Mask Order on the specified
date.
7.2 Align-Rite shall deliver the Products to the designated ship address
set forth on each purchase order and/or Mask Order, FOB/CIP Align-Rite's
manufacturing sites located in the United States. Xxxxxx shall be responsible
for all shipping and other costs of delivery from the manufacturing sites
located in the United States. Align-Rite shall retain a security interest and
right of possession in the Products and Xxxxxx hereby grants such security
interest therein to Align-Rite until Xxxxxx makes full payment. Title and risk
of loss or damage to Products shall pass to Xxxxxx at the FOB/CIP point.
7.3 Xxxxxx shall pay for the Products which are supplied under this
Agreement in full within thirty (30) days of the date of the applicable invoice.
ARTICLE 8
Strategic Alliance, Consultation and Cooperation Arrangements
8.1 During the Term, Xxxxxx and Align-Rite shall make their respective
representatives available once every Quarter in order for:
8.1.1 Xxxxxx to advise Align-Rite of its Product development
programs and its anticipated needs for Products and New Products;
8.1.2 Align-Rite to inform Xxxxxx of its capacity and technological
capabilities relating to Photomask products and services offered by
it from time to time; and
8.1.3 Xxxxxx to review Align-Rite's performance in supplying Xxxxxx'
Product requirements.
8.2 During the Term, Xxxxxx shall use its commercially reasonable efforts
to maintain for Align-Rite the good will of the business of the Photomask
Business Unit at the Closing Date (including, without limitation, merchant
Photomask customers, suppliers and other parties having relationships with the
Photomask Business Unit).
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8.3 During the Term, Xxxxxx agrees at Align-Rite's expense as set forth in
the Site Services Agreement to cooperate and to provide such assistance as
Align-Rite may require from time to time in maintaining the Photomask Business
Unit's current ability to manufacture Products which meet Department of Defense
("DOD") Secret and Top Secret status, provided such cooperation and assistance
is permitted under DOD and NSA regulations and is acceptable to DOD and NSA.
Xxxxxx shall allow Align-Rite the use of Xxxxxx' Classified Material Control
Center (CMCC) for processing, storing and shipping classified material pursuant
to DD254 requirements, if such use is permissible under DOC and NSA regulations.
8.4 During the Term of the Agreement, Xxxxxx shall use its commercially
reasonable efforts to promote Align-Rite's Photomask products and services to
(i) the merchant customers of the Photomask Business Unit, (ii) Xxxxxx' joint
venture partners, (iii) the semiconductor foundry businesses utilized by Xxxxxx
which will or are envisioned to require the purchase of Photomask products and
services, and (iv) other companies and foundries within the influence or under
the control of Xxxxxx, in each case in accordance with the terms of this
Agreement.
ARTICLE 9
Termination Rights And
Obligations Upon Termination
9.1 Unless otherwise terminated pursuant to the provisions of this Article
9, this Agreement shall continue in effect for the Term. The Term may be
extended on terms mutually acceptable to the parties.
9.2 This Agreement may be terminated at any time before the end of the
Term as follows and in no other manner:
9.2.1 By mutual agreement in writing by Align-Rite and Xxxxxx;
9.2.2 By Align-Rite upon Xxxxxx' failure to pay when due any amounts
required to be paid to Align-Rite after reasonable notice under this
Agreement;
9.2.3 By Xxxxxx upon the entry of any order for relief under any
provision of any applicable bankruptcy code in any bankruptcy
proceedings initiated by or against Align-Rite or the presentation
of a petition or convening of a meeting for the purpose of winding
up Align-Rite's business, or entering into liquidation whether
compulsory or voluntarily, or compounding with its creditors
generally, or the appointment of a receiver of any part of all of
either party's assets, or either party taking or suffering any
similar action in consequence of debt;
9.2.4 By Align-Rite upon the entry of any order for relief under any
provision of any applicable bankruptcy code in any bankruptcy
proceedings initiated by or against Xxxxxx or the presentation of a
petition or convening of a meeting for the purpose of winding up
Xxxxxx' business, or entering into liquidation whether compulsory or
voluntarily, or compounding with its creditors generally, or the
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appointment of a receiver of any part of all of either party's
assets, or either party taking or suffering any similar action in
consequence of debt;
9.2.5 By Xxxxxx upon Align-Rite's material breach of any of the
terms or conditions of this Agreement after written notice thereof
and a failure by Align-Rite to then cure such breach within thirty
(30) days except as otherwise provided in Section 3.6; and
9.2.6 By Align-Rite upon Xxxxxx' material breach of any of the terms
or conditions of this Agreement after written notice thereof and a
failure by Xxxxxx to then cure such breach within thirty (30) days.
9.3 In addition to any other remedies available to Align-Rite, in the
event Align-Rite terminates the Agreement, it shall have the following rights:
(i) if the Product has been delivered, Align-Rite may recover, together with any
incidental damages, any unpaid portion of the purchase price of the Product; and
(ii) if the Product has not been delivered, Align-Rite may withhold delivery of
such Product.
9.4 The failure of either party to enforce any provision of this Agreement
shall not be deemed a waiver of such provision.
ARTICLE 10
Warranties
10.1 Xxxxxx shall as soon as practicable, and in any event within thirty
(30) working days of the delivery of a Product at its premises, notify
Align-Rite in writing of any noncompliance with applicable Specifications.
10.2 If Xxxxxx fails to give notice in accordance with Section 10.1, then
except in respect of any noncompliance with applicable Specifications which is
such that it would not be apparent upon a reasonable visual inspection, the
Product in question shall be conclusively presumed to be in all respects in
accordance with its Specification, and Xxxxxx shall be deemed to have accepted
the quality of such Product, and Align-Rite shall have no liability to Xxxxxx
with respect to that Product and the warranties made in Section 10.4 shall not
apply thereafter.
10.3 If Xxxxxx rejects any delivery of a Product which it believes is not
in accordance with its Specification, then Align-Rite shall as soon as
practicable and in any event within five (5) working days of being requested to
do so by Xxxxxx supply a replacement Product which is in accordance with its
Specifications or shall notify Xxxxxx that it is unable to do so whereupon
Xxxxxx shall be entitled to obtain such replacement Product from a third party.
10.4 Align-Rite warrants that Products delivered hereunder shall be free
and clear of liens and encumbrances arising from actions or inactions of
Align-Rite and shall have been manufactured to the applicable Xxxxxx
Specification. This warranty shall terminate in accordance with Section 10.2 or
for any noncompliance which is not apparent upon reasonable visual
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inspection upon expiration of 135 calendar days following receipt by Xxxxxx or
its designee of a shipment. In the event a problem occurs or is discovered after
receipt by Xxxxxx, Align-Rite and Xxxxxx agree to discuss and resolve such
problem in good faith.
10.5 The liability of Align-Rite hereunder is solely and exclusively
limited to replacement, or repair, or credit of the purchase price, at Xxxxxx'
option, for any Product which is returned by Xxxxxx during the applicable
warranty period and which is found by Xxxxxx to be subject to adjustment under
this warranty.
10.6 THIS WARRANTY EXTENDS TO XXXXXX ONLY. THIS WARRANTY IS IN LIEU OF ALL
OTHER WARRANTIES WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE. THIS WARRANTY
DOES NOT APPLY TO DEFECTS ARISING AS A RESULT OF XXXXXX' DESIGN OR FORMULA. IN
NO EVENT SHALL ALIGN-RITE BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
DUE TO BREACH OF THIS WARRANTY. XXXXXX' SOLE REMEDY FOR ANY BREACH SHALL BE
LIMITED TO THE REMEDIES SET FORTH IN SECTION 10.5.
ARTICLE 11
Dispute Resolution and Arbitration
11.1 In the event that any dispute arises among the parties pertaining to
the subject matter of this Agreement, and the parties, through Align-Rite's
senior management and Xxxxxx' senior management are unable to resolve such
dispute within a reasonable time through negotiations and mediation efforts by
senior executives of both parties, such dispute shall be resolved as set forth
in this Article.
11.1.1 The following procedures may be initiated by written notice
("Dispute Notice") given by one party ("Claimant") to the other, but
not before thirty (30) days have passed during which the parties
have been unable to reach a resolution as described above. The
Dispute Notice shall be accompanied by (i) a statement of the
Claimant describing the dispute in reasonable detail and (ii)
documentation, if any, supporting the Claimant's position on the
dispute. Within twenty (20) days after the other party's
("Respondent") receipt of the Dispute Notice and accompanying
materials, the parties shall submit the dispute to mediation in the
Orlando, Florida area under the rules of the American Arbitration
Association. All negotiations and mediation procedures pursuant to
this paragraph 11.1.1 shall be confidential and treated as
compromise and settlement negotiations and shall not be admissible
in any arbitration or other proceeding.
11.1.2 If the dispute is not resolved as provided in Section 11.1.1
within sixty (60) days after the Respondent's receipt of the Dispute
Notice, the dispute shall be resolved by binding arbitration. Within
the sixty-day period referred to in the immediately preceding
sentence, the parties shall agree on a single arbitrator to resolve
the dispute. If the parties fail to agree on the designation of an
arbitrator
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within said sixty-day period, the American Arbitration Association
in the Orlando, Florida area shall be requested to designate the
single arbitrator. If the arbitrator becomes disabled, resigns or is
otherwise unable to discharge the arbitrator's duties, the
arbitrator's successor shall be appointed in the same manner as the
arbitrator was appointed.
11.1.3 Except as otherwise provided in this Article, the arbitration
shall be conducted in accordance with the Commercial Rules of the
American Arbitration Association, which shall be governed by the
United States Arbitration Act.
11.1.4 Any resolution reached through mediation and any award
arising out of arbitration (i) shall be binding and conclusive upon
the parties; (ii) shall be limited to a holding for or against a
party, and affording such monetary remedy as is deemed equitable,
just and within the scope of this Agreement; (iii) may not include
special, incidental, consequential or punitive damages; (iv) may in
appropriate circumstances include injunctive relief and (v) may be
entered in court in accordance with the United States Arbitration
Act.
11.1.5 Arbitration shall not be deemed a waiver of any right of
termination under this Agreement, and the arbitrator is not
empowered to act or make any award other than based solely on the
rights and obligations of the parties prior to termination in
accordance with this Agreement.
11.1.6 The arbitrator may not limit, expand or otherwise modify the
terms of this Agreement.
11.1.7 The laws of the State of Florida shall apply to any
mediation, arbitration, or litigation arising under this Agreement.
11.1.8 Each party shall bear its own expenses incurred in any
mediation, arbitration or litigation, but any expenses related to
the compensation and the costs of any mediator or arbitrator shall
be borne equally by the parties to the dispute.
11.1.9 A request by a party to a court for interim measures
necessary to preserve a party's rights and remedies for resolution
pursuant to this Article shall not be deemed a waiver of the
obligation to mediate or of the agreement to arbitrate.
11.1.10 The parties, their representatives, other participants and
the mediator or arbitrator shall hold the existence, content and
result of mediation or arbitration in confidence.
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ARTICLE 12
Confidentiality
12.1 During the course of this Agreement each party may obtain possession
of information belonging to the other parties which contains confidential or
secret information (e.g. inventions, know-how, trade secrets, future product
plans). As far as such information is disclosed by one party to the other party
it shall be clearly labeled "Confidential" or the like.
12.2 The party which obtains possession of such confidential information
shall maintain all such information in confidence and shall not disclose it to a
third party without the prior written consent of the other party. These
non-disclosure obligations shall terminate ten (10) years after receipt of such
information.
12.3 These non-disclosure obligations shall not apply with respect to any
information which: (i) now or hereafter, through no act or failure to act on the
part of the obtaining party, becomes generally known or available; (ii) is known
by the party at the time of obtaining it from the other party; (iii) is
furnished to third parties by the party without restriction on disclosure; (iv)
is independently developed by the obtaining party; or (v) is furnished to the
obtaining party by a third party as a matter of right and without restriction on
disclosure. The obligations of this Article 12 shall survive the expiration or
any termination of this Agreement.
ARTICLE 13
General
13.1 Independent Contractors. Both parties are independent contractors
under this Agreement. Nothing contained in this Agreement is intended nor is to
be construed so as to constitute Align-Rite and Xxxxxx as partners, agents or
joint venturers with respect to this Agreement. Neither party hereto shall have
any express or implied right or authority to assume or create any obligations on
behalf of or in the name of the other party or to bind the other party to any
contract, agreement or undertaking with any third party.
13.2 Amendments; Waivers. This Agreement and any schedule or exhibit
attached hereto may be amended only by agreement in writing of the parties to
the Agreement. No waiver of any provision nor consent to any exception to the
terms of this Agreement or any agreement contemplated hereby shall be effective
unless in writing and signed by the party to be bound and then only to the
specific purpose, extent and instance so provided.
13.3 Schedules; Exhibits; Integration. Each Schedule and Exhibit delivered
pursuant to the terms of this Agreement shall be in writing and shall constitute
a part of this Agreement, although Schedules need not be attached to each copy
of this Agreement. This Agreement, together with such Schedules and Exhibits,
and the Asset Purchase Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith, including,
but not limited to, the letter of intent dated April, 20, 1999, between Xxxxxx
and Align-Rite.
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13.4 Force Majeure. No party to this Agreement shall be deemed to be in
breach of this Agreement or otherwise liable to any other party in any manner
whatsoever for any failure or delay in performing its obligations under this
Agreement due to Force Majeure. If a party's performance of its obligations
under this Agreement is affected by Force Majeure, then: (i) it shall give
written notice to the other parties, specifying the nature and extent of the
Force Majeure, as soon as reasonably practicable on becoming aware of the Force
Majeure and will at all times use its reasonable endeavors to mitigate the
severity of the Force Majeure; (ii) the date for performance of such obligation
shall be deemed suspended only for a period equal to the delay caused by such
event; and (iii) it shall not be entitled to payment from the other party in
respect of extra costs and expenses incurred by virtue of the Force Majeure
event.
13.5 Assignment. Neither Align-Rite nor Xxxxxx may assign this Agreement
without the prior written consent of the other, except that Align-Rite may
assign its rights hereunder to any wholly-owned subsidiary or Affiliate of
Align-Rite or to any post-Closing purchaser(s) of all of the capital stock of
Align-Rite or of substantially all of its assets, and except that Xxxxxx may
assign its rights hereunder to any wholly-owned subsidiary or Affiliate of
Xxxxxx or to any post-Closing purchaser(s) of substantially all of the
Semiconductor Business Unit of Xxxxxx. Notwithstanding the above, Xxxxxx
covenants and agrees that in the event it sells all or substantially all of its
assets related to its semiconductor business (including, but not limited to, its
June 3, 1999 announced sale of its semiconductor business to a subsidiary of
Sterling Holding Company, Citicorp Venture Capital investment portfolio
company), it shall require as a condition of completion of such transaction that
the purchaser of such assets, as well as any successors of any such purchaser,
enters into an express assumption of this Agreement, as if such purchaser or
such successor were the original party to this Agreement, and the form of any
such assumption agreements shall be reasonably acceptable to Align-Rite. In the
event of any such assignments, Xxxxxx shall be deemed to have guaranteed the
performance of such purchaser's or successor's obligations hereunder and be
responsible therefor. Align-Rite covenants and agrees that in the event it sells
all or substantially all of the Business Assets, it shall require that the
purchaser of such assets, as well as any successors of any such purchaser,
enters into an express assumption of this Agreement, as if such purchaser or
such successor were the original party to this Agreement, and the form of any
such assumption agreements shall be reasonably acceptable to Xxxxxx. In the
event of any such assignments, Align-Rite shall be deemed to have guaranteed the
performance of such purchaser's or successor's obligations hereunder and be
responsible therefor.
ARTICLE 14
Notices
14.1 Any notice or any other information required or authorized by this
Agreement to be given by any party to the other must be given in writing by U.S.
mail, facsimile or overnight courier to the other party at the address for
service notified in Section 14.3 or to such other address as any party may
notify to the others from time to time in writing as being the address for
service.
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14.2 To be a valid and enforceable notice, evidence of receipt by the
recipient of such notice shall be required.
14.3 The addresses and contact numbers of those persons who are authorized
to accept service on behalf of the parties to this Agreement are set out below:
On behalf of Align-Rite and Sub to:
Mr. Xxxxx XxxXxxxxx
Xx. Xxxxx Xxxxxxxx
Align-Rite International, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
XXX
Telephone No:(000)000-0000
Facsimile No: (000)000-0000
With a copy to:
J. Xxx Xxxxxx, Esq.
Xxxxxx X. Xxxxx, Esq.
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone No:(000)000-0000
Facsimile No: (000)000-0000
On behalf of Xxxxxx to:
Xxxxxx Corporation
Semiconductor Sector
Attention: Xxxxxxx X. Xxxxxxxx
0000 Xxxx Xxx Xxxx X.X.
Mail Stop 00-000
Xxxx Xxx, XX 00000
Telephone No:(000) 000-0000
Facsimile No: (000) 000-0000
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With a copy to:
Xxxxxx Corporation
Xxxxxx X. Xxxx
Vice President-Counsel
0000 Xxxx Xxx Xxxx X.X.
Mail Stop 00-000
Xxxx Xxx, XX 00000
Telephone No:(000)000-0000
Facsimile No: (000)000-0000
IN WITNESS WHEREOF, this agreement is entered into by duly
authorized representatives of the parties hereto on the date first above
written.
ALIGN-RIGHT INTERNATIONAL, INC.,
a California corporation
By: /s/ Xxxxx X. XxxXxxxxx
-----------------------------------------
Xxxxx X. XxxXxxxxx
Chairman of the Board and Chief Executive
Officer
ALIGN-RITE, INC.,
a Florida corporation
BY: /s/ Xxxxx X. XxxXxxxxx
-----------------------------------------
Xxxxx X. XxxXxxxxx
Chairman of the Board
XXXXXX CORPORATION,
a Delaware corporation
BY: /s/ X.X. Xxxxxx
-----------------------------------------
X.X. Xxxxxx
Vice President-General Manager Operations
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